Will Apple finally embrace LTE? Imagining the possibilities of a 4G iPad 3

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The most likely scenario

If LTE is coming to the iPad 3, it will be an add-on option, much like 3G capability is with the iPad 2. Don’t expect Apple to abandon the idea of selling a starter Wi-Fi-only iPad for $499—after all, the company has had no trouble selling as many as it can make. That means we can expect six different price points for the iPad 3: three WiFi-only models with increasing amounts of storage, and the same Wi-Fi-and-storage options coupled with 4G service at higher price points. Apple currently charges a $130 premium for packing 3G capability into an iPad: there’s no word on how much adding 4G to an iPad will increase the sale price, but it’s unlikely to be less than $130. Again, it isn’t having any trouble selling them.

Could we be looking at nine different iPad 3 models? Three with Wi-Fi, three with LTE, and another three with the existing 3G technology? It seems unlikely. The LTE radios Apple would have to build into an iPad to support LTE 4G service on either Verizon or AT&T’s network would also be able to drop down to 3G service on those networks. Neither operator has enough LTE coverage to make 4G-only devices a practical reality. (Just look at their LTE phone offerings: All drop down to 3G when LTE is not available.) If Apple puts LTE 4G into the iPad 3, there won’t be a separate iPad 3 with 3G capability.

It does seem likely that an iPad 3 with LTE service on Verizon’s network would not work with LTE services from AT&T. Verizon Wireless and AT&T operate their 4G services on different frequency sets: they’re not interchangeable. It is possible Apple has the clout to build LTE-capable radios that would function on both networks, but it’s not clear that they have any incentive to do so — and Verizon and AT&T would almost certainly resist the idea of customers being able to hop between carriers on a whim.

Another variable is LTE service outside the United States. European LTE services operate in different frequency blocks than either AT&T and Verizon, and LTE service in Japan is in a significantly different portion of the spectrum. Although Apple made real strides with the iPhone 4S as a “world” phone, it seems unlikely the company would incur the per-unit cost of making a single LTE radio that could support a good range of international LTE services. That might happen in time, but seems improbable in the current market.

Power play

As with the current generation of LTE smartphones, if the iPad 3 includes LTE capability, it’s going to have a significant impact on battery life. LTE smartphones are struggling to run for eight hours. Although the iPad 3 has a lot more room for batteries, it will also have a faster processor, more storage, and a much larger display to illuminate and manage. Apple likes to tout the iPad 2 has having 10 hours of battery life — up to 9 hours with 3G. The iPad 3 will almost certainly have at least the same Wi-Fi battery life as the iPad 2, but a 4G radio is going to have an impact. Don’t be surprised if an iPad 3 using 4G LTE can only handle about six to eight hours of LTE use.

What about Sprint and T-Mobile?

While the iPhone is available from Verizon, AT&T, and Sprint (as well as C Spire), only AT&T and Verizon offer the 3G iPad. Although Sprint will be launching LTE services this year, if the iPad 3 comes to Sprint, it will almost certainly be by falling back to 3G technology, rather than using 4G LTE. Apple will not likely make a version of the iPad 3 supporting Sprint’s existing WiMax services — no Apple mobile products have ever supported WiMax, and with the technology slated to be phased out, the move wouldn’t make any sense now. Similarly, Apple doesn’t make any of its products (including the iPhone) compatible with T-Mobile’s specialized HSPA+ services: It’s hard to believe Apple would decide to make a special version of the iPad 3 just for T-Mobile.

Billing

The real question mark for an LTE iPad 3 would come down to billing for LTE services. Currently, AT&T; and Verizon offer pay-as-you-go billing for iPad users, with no contract required. AT&T starts off at $15 per month for up to 250MB of mobile data, scaling to $50 a month for up to 5GB. Verizon starts at $30 a month for 2GB, with 10GB a month available for $80. In either case, if users don’t use 3G services in a particular month, they don’t pay a cent.

Although mobile users are accustomed to making two-year commitments for phones, so far tablet users are averse to the same type of commitments, so it seems likely both AT&T and Verizon will stick to no-contact pay-as-you-go services for a hypothetical LTE iPad 3. But the rate structure is anybody’s guess. In theory, an LTE device on either AT&T’s of Verizon’s networks could eat through a 250 MB monthly data plan in as little as three minutes. Clearly, the data tiers for existing 3G service on the iPad will be impractical. Carriers will have to increase the tiers: the question is how they will change the pricing structure. And while a small subset of tablet users would likely pay for LTE whatever the cost, consumers don’t seem to find mobile broadband as important for tablets as it is for phones: recent studies find more than half of tablet owners stick to Wi-Fi.

What if the iPad 2 stuck around?

Here’s another variable to throw into the mix: Just as Apple has kept the iPhone 4 and the iPhone 3GS around, Apple could decide to keep the iPad 2 on the market after the introduction of the iPad 3, albeit at a lower price point. A cheaper iPad 2 would enable Apple to compete easily with Android tablet manufacturers (like Amazon) that are undercutting the iPad on price. If the iPad 2 dropped to (say) $299 with the introduction of the iPad 3, suddenly the $199 Kindle Fire becomes a lot less compelling. And there’s no reason those less-expensive iPad 2’s wouldn’t still be available with optional 3G capability.

Conclusion

Even if 4G LTE capability in the iPad 3 doesn’t bring much to consumers — and could be astonishingly expensive for heavy data users — the move could be a solid marketing win for Apple, helping cement the iPad’s dominant position the tablet market. Just like adding a (low quality, inferior) camera to the iPad 2 let Apple tick an important marketing checkbox relative to other tablets (“has rear-facing camera”), 4G LTE would raise the bar for what other tablets would need to compete head-to-head with the iPad. Even if very few people use it.